Summary of Conclusions

Securities and Markets Stakeholder Group Date: 20 December 2012 ESMA/2012/SMSG/72 Summary of Conclusions Securities and Markets Stakeholder Group Date: 23 November 2012 Time: 10:00 17:00h Location: ESMA, 103 rue de Grenelle, 75007 Paris Contact: jacob.lonnqvist@esma.europa.eu T: +33 1 58 36 43 39 In absence of the Chair Guillaume Prache, the meeting was chaired by Vice-Chair Judith Hardt in the morning and Vice-Chair Peter De Proft in the afternoon. 1. Adoption of agenda Conclusion: The agenda of the meeting, 2012/SMSG/64 was approved. 2. Approval of the summary of conclusions of the September meetings Conclusion: The summary of conclusions from the SMSG September meeting jointly with the ESMA Board of Supervisors (SMSG/2012/61) and the SMSG September meeting (SMSG/2012/62) were approved. 3. Recent Market Developments The ESMA Chair stated the importance of ESMA hearing what market participants have to say first hand on different important market developments. The issues discussed under this agenda point were the following: Indices: Vice-Chair Judith Hardt presented a number of international developments in the area of indices. The ESMA Chair remarked that, following market developments, ESMA is very active on the topic and has currently two key work streams in progress (jointly with EBA): Principles for benchmarks rates (in advance of Commission proposal for legislation) and Review of EURIBOR. ESMA also coordinates its work with IOSCO. The Group made several observations on this subject. Self-placement by financial institutions: Pierre-Henri Conac presented the topic. The Group discussed the topic of institutions making offers of shares in the own company, including strong promotion involved, and in particular whether the issue should be considered to be covered by MiFID. The ESMA ESMA 103, rue de Grenelle 75007 Paris France Tel. +33 (0) 1 58 36 43 21 www.esma.europa.eu

Chair stated that ESMA together with EBA is working on the topic of the impact of recapitalisation through such products and he shared his scepticism that prospectus rules would be able to address the problem discussed. FTT: The Group discussed a possible Financial Transaction Tax, and its potential influence on the securities market. Views were expressed in support of a possible tax under certain conditions and the political necessities found to be behind such proposals. Banking Union: The Group discussed briefly the current Banking Union proposals. The ESMA Chair noted that there are two main interesting points for ESMA: How will it affect the single market with more focus on the Eurozone? Secondly: How would the stronger focus on prudential supervision in the EU affect securities supervision? Verena Ross mentioned the work the ESMA does in close collaboration with EBA and EIOPA regarding the Review of the EFSF which will take place in 2013 OTC pre-trade transparency: The Group discussed briefly the issue of OTC pre-trade transparency. One member remarked that now up to 50 % of all trades take place without proper transparency and that this topic will be central next year, in the MiFID debate. Conclusion: The Group concluded that market developments should be a standing item on the agenda of the SMSG meetings going forward. 4. Steering Committee s report / internal affairs 4. A - SMSG activity report The SMSG activity report covering the work done by the SMSG since its start until the end of 2012 was discussed. Members made a couple of remarks on possible drafting improvements to be made, for which some time should be allowed. Conclusion: The Group agreed to use a cut-off date of 23 November 2012 (date of the last SMSG meeting of 2012) for the report, (thereby covering the activities of the SMSG in 2012 until the date when the report was discussed by the SMSG). Furthermore it was agreed that the report would be open for further comments on detailed drafting suggestions for a limited time and re-circulated to the Group before sign off. 4. B - SMSG length of mandate The ESMA Chair announced that he had decided that the start date of the mandate should be 1 July 2011, bearing in mind the beginning of the work of the SMSG and its first meeting which took place on 21 July 2011. Consequently the two and a half year term of the SMSG will end on 31 December 2013. He also informed that ESMA will coordinate together with EBA and EIOPA its activities in the launch of the call for candidates for membership in the SMSG for the next mandate-period. 5. SMSG working groups Reports on recent developments and the adoption of advice A. Investor protection 2

Niamh Moloney informed the Group of the activities of the Investor protection working group. She expressed the support from the SMSG for ESMA s work to use the breach of union law tool where possible and suitable for the purpose of strengthening investor protection. ESMA, Stephan Karas, Head of Unit clarified that ESMA will try to use the most useful tool available for each individual case of investor protection concern. ESMA, Laurent Degabriel, Head of Division, updated the SMSG on the progress made with regard to the issue of ETFs. The ESMA Chair clarified that the breach of union law tool would require an explicit decision in the Board of Supervisors. Conclusion: ESMA will report back on the developments on the ETF issue. The SMSG is welcome to flag concerns of regulatory arbitrage with ESMA. The SMSG supports ESMA s work to use the breach of union law tool where possible and suitable for the purpose of strengthening investor protection. B. Shadow Banking (non-bank lending) The Rapporteur, Vice-Chair Peter De Proft, made a presentation of the current developments in the international area regarding Shadow Banking (non-bank lending) and focused on the FSB work as well as the European regulatory developments in this area. Peter De Proft also presented the potential new reforms on Money Market Funds from the FSB/IOSCO. The ESMA Chair remarked that ESMA MMF guidelines are in line with the IOSCO guidelines. Conclusion: The Group will discuss the topic of non-bank lending at its next meeting. C. SME financing The Rapporteur Vice-Chair Judith Hardt recalled the work done on the SME report and the presentation made in September for the joint meeting with the ESMA Board of Supervisors. She mentioned the work that the European Commission is currently doing with regard to long-term financing and the Green paper. The ESMA Chair informed the Group that the ESMA Board of Supervisors will discuss the SME report of the SMSG at its next meeting. Conclusion: The SMSG shall discuss the SME topic again at the next meeting once ESMA has given its feedback on the report. D. MiFID Remuneration The Rapporteur Pierre-Henri Conac presented the proposed advice to be given to ESMA in its consultation on Remuneration in the context of MiFID. Discussion took place around the topics of 100 % variable remuneration and proportionality, where the SMSG supports it cannot be used as an excuse for mis-selling. 3

Conclusion: The SMSG approved the advice to be given to ESMA in response to its consultation on Guidelines on remuneration policies and practices (MiFID). E. Retailisation ESMA has asked for the views of the SMSG on its Retailisation reports (Ref 2012/CEMA 0004 and 0005). The investor protection working group has been asked to take the work forward and Angel Berges-Lobera has kindly accepted to lead the work in drafting a reply together with Vice-Chair Judith Hardt. There was a discussion by the group about the SMSG paper (2012/SMSG/70) tabled at the meeting spelling out the draft reply of the SMSG to the Retailisation papers of ESMA that it had asked for advice on. The ESMA Chair emphasised that ESMA would much prefer to have a formal advice from the SMSG that could be discussed in the ESMA Board of Supervisors, compared to technical comments given as informal feedback. Conclusion: The SMSG agreed to provide advice to ESMA on the Retailisation Reports. Vice-Chair Judith Hardt together with Angel Berges-Lobera will take the work forward with the working group in order to provide advice to ESMA in advance of its 18 December Board meeting. Outside publication of this SMSG advice to be discussed at the next SMSG meeting. F. CRA Verena Ross explained that ESMA has decided to dissolve the Consultative Working Group on Credit Rating Agencies (CRAs). This means that ESMA will use the SMSG input more extensively when consulting on CRA issues. The Head of the CRA Unit at ESMA, Felix Flinterman, presented the forthcoming CRA III regulation which is in its final stages of negotiation. ESMA will issue Guidelines on the scope of the CRA III regulation and expect these to be published in the second or third quarter 2013. Verena Ross mentioned that the formal consultation dates might be around mid-2013. Conclusion: The SMSG will come back to the CRA issue in 2013 in the context of CRA III. 6. The 2013 SMSG Work programme Conclusion: The SMSG approved the work programme for 2013 as presented during the meeting. 7. AOB Conclusion: The comment about the need for timely circulation of all meeting documents was duly noted. 4

List of participants at the Meeting on 23 November 2012 Name Authority / Organisation / Department (if internal) Participation at the meeting on 23 Nov Guillaume Prache Chair of SMSG, Managing Director of the European Federation of Financial Services Users ( EuroFinuse ) Judith Hardt Vice-Chair of SMSG, Secretary General, FESE Peter De Proft Vice-Chair of SMSG, Director General, EFAMA Carlos Arenillas Chairman and CEO of Equilibria Investments SIL. Sophia Argirova Ludo Bammens Roland Bellegarde Angel Berges-Lobera Thomas Book Pedro Braga da Cruz Vice Chairperson of the Management Board of the Association of Bulgarian Investor Relations Directors /ABIRD Director European Corporate Affairs KKR - KOHLBERG KRAVIS ROBERTS & CO. (London) Member of the Management Committee NYSE Euronext Group Executive Vice President & Head of International Listings and European Execution Professor of Finance, Universidad Autonoma Madrid Member of the Executive Boards of Eurex Frankfurt AG, Eurex Zürich AG and Eurex Clearing AG Consultant of Companhia Portuguesa de Rating, S.A Salvatore Bragantini Advisor to Borsa Italiana (LSE Group) Zita Ceponyte President, Lithuanian Consumer Institute Absent Aleksander Chlopecki Professor of Law, University of Warsaw Absent 5

Pierre-Henri Conac Professor of Commercial and Company Law, University of Luxembourg Hans van Damme EFRAG Supervisory Board, Vice Chair Sally Dewar Carmine Di Noia Jaroslaw Dominiak Lars Hille Managing Director - International Regulatory Risk Deputy Director General and Head of Capital Markets and Listed Companies, ASSONIME President of the Management Board of the Association of Individual Investors Member of the Board of Managing Directors of DZ BANK AG Anne Holm Rannaleet Senior adviser, IK Investment Partners Ltd. Jesper Lau Hansen Professor of Law, University of Copenhagen Sari Lounasmeri CEO, Finnish Foundation for Share Promotion Dorothea Mohn Niamh Moloney Policy Officer for Pension Schemes and Capital Investment, Federation of German Consumer Organization Professor of Law, Law Department The London School of Economics and Political Science Absent Katerina Papageorgiou Attorney-at-Law, Deutsche Bank AG Jean-Pierre Pinatton Xavier Rolet Adriana Tanasoiu Tjalling Wiersma Chairman of the Supervisory Board of Oddo & Cie Group LSE Group Board on 16 March 2009 and became CEO on 20 May 2009 Chief Executive Officer of Depozitarul Central (Romanian Central Securities Depository Head of Legal & Compliance, Shell Asset Management company 6

Gabriele Zgubic Head of Department of Consumer Policy Austrian Federal Chamber of Labour, Vienna Absent ESMA Steven Maijoor ESMA Chairman Verena Ross ESMA Executive Director Jacob Lönnqvist ESMA Stephan Karas Head of Legal Cooperation and Convergence Unit Rodrigo Buenaventura Head of Markets Division (partly) Laurent Degabriel Head of Investment and Reporting Division (partly) Antoine Bouveret Senior economist (partly) Sarah Raisin Senior officer (partly) The following members of the SMSG were excused: Guilaume Prache, Sophia Argirova, Thomas Book and Ludo Bammens. Other members of the SMSG not present were: Zita Ceponyte, Aleksander Chlopecki, Dorotea Mohn and Gabriele Zgubic. 7